Forex Trading Secrets you Need to Know

On 08.02.10, In Trading, By Stevie Wonder

In this article, we will attempt to take a good look at Forex trading secrets.  There are vendors that offer books about how to become successful in the foreign exchange market.  If these vendors really knew the secret then they would not be selling books, instead they would be making money in the currency trading business.  Not that all books are bad, but they do not give you a magical trading system.

Initially, we need look at the basics of currency trading prior to analyzing the potential of the market as a source of trading profits.  Currency values do change, sometimes rapidly, between nations, which provide an opportunity for profits.  The Forex market trades 24/7, six days a week and the great amount of trade volume in currency trading provides great liquidity.  You can make a living trading Forex.

However, there are numerous individuals out there who will advise you that in order to be successful in this business, you will need a very complicated trading system.  But if you create a complex system, the determination of entry and exit prices will also be complicated to you.  Of course, any “magical system” that makes an advanced prediction of the prices in the market is absolutely nonsense – neither is guessing going to lead you to success; it will only direct you to failure.  Just as with advertisements that tout “black box” online stock trade software, be very wary of these claims of instant profits.  One of the Forex trading secrets is to constantly operate your trading as a business using technical and fundamental analysis methods that you completely understand.

There are several crucial guidelines on Forex trading that are vital to the success of your trading.  These simple tips are your tool to become successful in the currency trading business:

  • Follow your Forex system meticulously.
  • Profitable systems with manageable drawdowns are the ones you should look at, which means they have been traded and back-tested in real-time and confirmed to be profitable.
  • Using risk management or money management techniques
  • Try to trade using demo software in order to understand the nuances of the system and the rules you need to follow.
  • Select a system that uses the currencies that you want to trade and the times you are available to trade.
  • You should not overtrade.  Trade properly.  If your system does not generate a trade for the day, then wait for tomorrow.
  • Set a time to monitor the progress of your system; the mistakes, drawdowns and profits that have been made during trading.
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Explanation of Financial Markets

On 07.19.10, In Trading, By Stevie Wonder

The range for financial markets is extremely broad and there are many different investment vehicles for you to park your money.  There are items that you could pick up in each market and they are named as such mainly because of what they offer to the people. Read on and know where you could get the items that you are looking for.

First up is the Spot Market. It is an “on the spot” delivery for the assets that have been bought or sold in the market. The prices here are fixed upon the spot prices. The contrasting market of this is the Futures Market where the items are being sold at a future date but has been agreed upon at the current time. Thus, the person can agreed to buy a sack of cotton today for $50 but the actual buying will be three months from now. If the sack of cotton drops to $45 at that future date then the buyer has lost $5 on the price but the seller has gained that loss.

We also have the Money and Capital Markets. The former are for short term but very much liquid debt securities. Example markets of this are the New York, London and Tokyo money markets. The latter caters for the intermediate and long term debt and corporate stocks. The New York Stock Exchange is the most famous market that caters to these items.

Primary and Secondary Markets are also available to those who are into raising of new capital. The difference between the two is that the former has the actual companies sell their new securities to the market while the latter trades the securities and financial assets among the retail investors looking for the next stock pick winners.

We can also call for the Private and Public Markets regarding selling of the stocks. Private Markets are established for those who want to work out their dealings just among the parties involved. The transactions are kept safe among the two parties that are buying and selling. The dealings can be structured according to the appeals of the parties. The latter on the other hand, buy and sell the stocks and other financial instruments publicly by using an organized exchange market. The instruments traded here are standardized since it is open to a variety of investors that may have different needs and wants. This is to balance the playing field of the investors.

The stock market is very broad and you can definitely find something that you would want to invest in. Some can be spot on; some need more risk taking than the usual. But overall, all these markets offer the stocks are sufficient to settle all the whims of an investor’s stock market picks.

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The Difference Between Forex Trading And Commodities

On 07.12.10, In Trading, By Stevie Wonder

If you are planning to start trading currencies and have been getting confused with all the terms being thrown at you, here’s one that hopefully will clear up at least one issue – the difference between trading currency and trading commodities.

Trading currencies is trading in foreign money. This is commonly called Forex trading.  That is the money being used by different countries. Usually the top currencies are the ones most traded like the US Dollar, the Euro, British Pound, the Japanese Yen, Australian Dollar, Canadian Dollar, and Swiss Franc. Currencies are traded in pairs which means that you need to choose two currencies to work against each other.

For instance, you want to make money on the Euro because it is on an upswing, so you choose the US Dollar which is steady, but not necessarily thriving. Thus, with US Dollars, you buy Euros in the hope that you can buy low and sell high. Now choosing your pair is not as easy as it looks. This is because you need to study the market and see which one will stack up well against the other, or vice versa. In other words, you need to pick a solid Forex trading strategy.

In trading commodities, you are trading in raw materials. There is a long list of commodities that you can buy and sell at a profit like livestock; agricultural products like sugar, corn, coffee, cocoa; precious or industrial metals like gold, silver, copper, nickel, ; energy like natural gas, crude oil, propane, or ethanol; and environmental commodities like certificates of energy efficiency, carbon offset, and renewable energy.

At present, the hot commodities (sought after) are gold, silver, soya, cotton, and menthol oil, to name a few. These are products that are either needed for massive production, or in the case of gold as compensation for the weak US Dollar.

Deciding whether to trade in currencies or commodities would really depend on your personal business plan. If you are in manufacturing, you might want to consider trading currencies because you can forecast more easily your expenditures if you work with a relatively fixed rate for buying with foreign currency.

On the other hand, trading commodities might work for a wholesaler/retailer who would like to stock up on a specific commodity because he expects the price to go up. For instance, with all the global warming going on, and strange weather situation we have been experiencing, a commodities trader might want to invest in agricultural products that are not easily perishable like corn, soya beans, or rice.

In both kinds of trading, you are dealing with investment in the future, hoping that you bought the right product or currency. If you have done the legwork, then it will be easier for you to forecast a trend. In both kinds of trading, you must work on finding out facts, world events, and trends. Without the right information, it does not matter what you invest in, the risks are higher and the chances for a loss increases.

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Finding A Free Forex Bonus

On 06.29.10, In Trading, By Stevie Wonder

Foreign exchange selling and buying online attracts investors each day. Specific brokerage services for foreign exchange gives out bonuses for traders which are new. You will discover different bonuses awarded onto internet traders and realize that it is the most generous and obtainable rewards on brokerage services for foreign exchange.

Every brokerage service in companies tries its best to bring about benefits for the current members and the new traders. For instance, when your cable service provider gives you a charge free movie in a month, stockbrokers give out real funds on these bonuses for you to get tempted to begin selling and buying with the use of actual cash, thus, eventually you become a trader. Brokers of foreign exchange generously reward giveaways most especially during your first input.

One way to realize such reward programs is dealing with advertising promos provided in the kind of charge free cash. It is a way for internet stockbrokers to definitely bring you their websites and give you buying and selling actuality.

As we get deeper talking about the kinds of free Forex bonus you can get, let us understand the necessities in money that is charge free. Foreign exchange bonuses problems and conditions have a component called wagering which is known in online gambling business. It is a concern where disagreements may develop. There are few problems and conditions you can come across when thinking about rewards.

First is you have to buy or sell ten mini real money accounts in every $25 bonus granted from your brokerage service before you may withdraw such reward. One mini whole means ten thousand models of currency you choose to buy or market. Such bonuses can be given through each account, household, individual or anywhere there are computer services for such transaction.

There is a reward called the welcome bonus which is given to you as early as your first input along with having chosen your brokerage service. This is a way where such brokerage service for foreign exchange thanks you for having a member in, and selling and buying foreign exchange.

To keep you coming back, stockbrokers shall reward you with loyalty bonuses. Moreover, another kind of exchange reward is called the “No Put in Bonus” which is the easiest and smallest among all bonuses. The only thing you need to accomplish is getting player accounts in brokerage services and you may also have money that is free of charge.

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Stock Buying 101: Introduction for New Investors

On 06.06.10, In Trading, Uncategorized, By Stevie Wonder

Stock buying involves two actions: choosing the right stock to buy and the actual buying of the stock. Learning both of them can help you establish your own stock portfolio.

Of course, you could use some help when it comes to purchasing stocks. For that purpose, you have to avail of the services of a stockbroker. Licensed stockbrokers are authorized to buy stocks on behalf of their clients. Depending on your needs, a stockbroker may offer various services. Some brokers provide full service, while others carry out only those tasks that you require and give you financial analysis software instead. Also, some brokers provide only investment advice and tips, while others do the stock purchase for you. Regardless of your choice, you must register an account with an online broker. But before you do so, choose the broker you want to deal with. Once you have made your choice, fill out the required documents and place a fund in your account for your investment. And when you are ready to trade stocks, order a stock and indicate the number of shares you want to purchase. In your online trading account, look for a stock and enter the number of shares and click the buy tab. It is that simple. You will get to own the stock if you have sufficient funds in your account.

If you are going to select a stock on your own, listen to the recommendations of your stockbroker or money manager. Research the company to determine if its stocks will be profitable in the future. Aside from the Internet, other good sources of information about a company are newspapers and financial statements of companies. You need to check pertinent details such as the revenues, relative value, and return of equity of the company you are considering. A stock investing software program should come in handy if you need help with your research about companies. Buying stocks is easy and profitable if you choose a company wisely.

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Learn How To Read Stock Charts

On 05.26.10, In Trading, By Stevie Wonder

Stock trading can be rather difficult to learn.  It requires you to analyze a large amount of information, and make quick decisions based on that info, and you often have a lot of money on the line.  Learning to trade well requires a lot of experience and practice, but learning stock charts will help you with the learning process

One of the best things you can do to improve your trading is to learn how to read stock charts.  Stock charts are a visual representation of the information being processed by the stock market.  They give you an at-a-glance idea of what has transpired price-wise, and if you choose, volume-wise as well for whatever time-frame you’ve chosen.  For intraday trading, you would be using charts with smaller time-frames.  Typically time periods from 1 minute to 60 minutes are used for this.  For swing trading, you’d use charts from the 60 minutes, up to the daily, and maybe even the weekly.  If you’re more of a long-term investor, you’re probably going to stick with the daily, weekly, monthly, and possibly even yearly charts.

In addition to the chart itself, there are indicators you can use that help process the massive amounts of data that are coming through the market at any given time.  One commonly used indicator is the RSI, or relative strength index.  This indicator attempts to illustrate momentum in the market, as well as informing you when a stock may be overbought or oversold.  Another commonly used indicator is the MA, or moving average.  The moving average is a line plotted based on the average of a user-defined set of periods within your chosen time-frame.  For example, if you’ve chosen an MA(10) on a 5 minute chart this formula will average the closing price of each 5 minute period for 10 periods, and plot a line based on the result.  An EMA, or exponential moving average does a similar job, except it decays the value of older time frames, giving more weight to the most recent time-frames.  One common trading strategy is to plot two different MA value lines (for example an MA(5) & MA(10)) and buy when the faster (MA(5)) crosses above the slower (MA(10)), and sell when the opposite occurs.

There are literally thousands of indicators either created by stock chart software companies, or users of the systems.  They all have merit in certain circles, but remember that they are all essentially recycling and using the same basic information – volume, price and time.  Your stock chart is the most basic insight into this information, and along with a volume indicator, you can do quite well just learning some basic stock chart analysis, and this will, in turn, help you understand the stock market in general.

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Make your life an easy one by learning how to trade options.

On 04.21.10, In Trading, By Stevie Wonder

When you are exploring your options on working from home and you are thinking of trading for a living, then why not look into options trading? Learning how to trade options can be to your advantage if you know what you are getting into.

One of the most important things to check is your capital. Capital is one of the main things used to determine exactly how you should trade; whether it be stocks, commodities, or currencies. It would be in your best interest to have at least fifty thousand dollars set aside, just to be safe.

You can determine how much needs set aside just by having another stable income. The lower the amount of the second income, the higher the amount set back needs to be.

There are some important terminologies needed to be understood before you branch out into the option trading world. These are called puts and calls, Call gives the buyer the option but not the obligation to purchase 100 shares. While puts allows the buyer the option but does not oblige them to sell 100 shares.

The reason for this is due to the fact that the other person assumes the stocks will rise or fall more than they already have. The assets for these options series have a monthly expiration date or else the assets themselves would last forever.

There are two types of option traders you will find while learning how to trade options: one is known as the speculator, the other is the strategist. The only difference between the two are the their holding period and their ability to gauge which way the market is heading.

Everything has a cost, but the advantage to being a speculator is that there is less of a risk in losing money and an endless reward of money. It is good to remember that the strategist is almost always a part of the deal somewhere throughout the day.

It is not often that your risks can increase by much. Whoever you are working with to get the deal done is always one or the other – a strategist or speculator. Determining this can help you in the long run. Always keep in mind that when you enter this business, nothing is set in stone.

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Investing: How To Invest Properly

On 04.06.10, In Trading, By Stevie Wonder

Investing can be a fairly easy to learn, but very difficult to master.  Even the people like Warren Buffet who make millions from the stock market and other investment tools each year do not have a perfect record.  Sometimes, people will just lose money, but one of the keys to investing is diversification.  There are many other tips when it comes to investing, and I am going to share with you how to invest properly.  Since each person’s situation is different, not every tip will apply to everyone, but take what will help you and your situation.

  • One of the first things that you should do when you start investing is to learn the various types of things that you can invest in.  Stock trading, currencies, options, futures, mutual funds, bonds, certificate of deposits, precious metals, and many other types of investment opportunities are available.  All of these carry different kinds of risks, rewards, as well as requiring different amounts of maintenance (daily, weekly, or some you can just let sit and grow) so picking a type that matches your lifestyle is the best thing to do.
  • Once you have researched the various kinds of investment opportunities, you’ll want to pick the ones that are best for you and then start looking at the options.  Let’s take stocks for example since that is what most people think of when it comes to investing.  Stock picking is based on how well you think a company is doing, and if people buy more stock, the price goes up, and if people are selling, then the price goes down.  You’ll want to research different companies to see how they’ve done traditionally, what they are planning on doing in the short term future as well as the long term future.
  • No matter what type of investments you decide to make, diversification is the most important principle when it comes to investing, and one of the best overall financial planning tips in all areas of finance.  Do not put all of your eggs in one basket, no matter how much as a “sure thing” someone claims that it may be.  Nothing in investing is a sure thing, so be sure to spread out your investments so that you can minimize your risk and maximize your gains.  Sure, you may not make as much, but you’ll also not be risking as much either, allowing you to make much more money over the long term.
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Stock Picking For Profit

On 03.30.10, In Trading, By Stevie Wonder

Have you ever wanted to go cow tipping?  It does sound like a lot of fun and just a little bit dangerous.  While I am not suggesting you do that, I am suggesting that you spend a little time in an activity known as stock picking.  Stock picking is the fine art of being able to determine the potential stocks you want to invest in which will give you the best return on your money.  This is a very important activity if you wish to become wealthy within your trading system.  If you cannot find the correct stocks to invest in, you should either not be involved in the stock market, or you should try investing in tracker funds instead.

Many people will use a stock broker to help them with their stock picking.  They do not feel that they are able to find the winners so they defer to a professional.  This is all well and good but how much trust are you willing to put in your stock broker and are you willing to pay for that service.  Wouldn’t it be great if you were able to find those stocks that you wish to invest in and feel comfortable with that selection of stocks.  Then you would be able to use an online broker to place your trades and save that money that you were paying to your broker.

Stock picking is kind of like raising children.  As soon as you think you have it figured out the game changes on you.  A system that seemed to work well suddenly does not work at all.  This is going to happen.  You are going to find some losers as well as winners.  If one successful rule for stock picking could be found, there would be more investment millionaires out there.  The thing is, there is not one solid and fast rule and yes the game does change.  The thing you need to be willing to do is to accept that fact and move on.  Have an exit strategy for each trade you make.  Be willing to accept a loss if that is what happens and move on.  If there is a loss, get out soon.  Do not fret about your lost opportunities and finances.  Cut your losses and get into the next stock that will be a winner for you.  The sooner you pull your money from a loser, the sooner you will be able to put it into a winner.

There are many different methods you can use when picking stocks.  These include fundamental analysis, technical analysis, value or growth investing.  You can even use a strategy known as Dogs of the Dow.  This is a contrarian viewpoint that all solid beaten up stocks eventually turn and become great again.  What ever you decide to do, like tipping cows, it will be a fun ride.  I am confident that you will be able to make money with this activity.

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Penny Stocks: The Poor Man’s Investment?

On 03.26.10, In Trading, By Stevie Wonder

Whether you buy penny stocks in Canada or the US, in many ways penny stocks are the poor man’s opportunity to hold, trade, and own stocks. They are properly defined as stocks that can be purchased for under five dollars. A lot of times people see this and they don’t believe it because stocks are generally way more expensive. However, penny stocks are a legitimate and viable stock buying method.

An advantage of penny stocks is that they allow everyone a chance at owning stocks. It is almost a way that encourages people to invest. It can also be used as a training course since a novice investor can practice managing a portfolio of penny stocks. This will allow enough room to make mistakes as the person learns how to manage the account without losing a fortune.

These stocks also allow small businesses to have a fighting chance. If a small business offers penny stocks they will be able to get the finances they need to grow their business. Most of the time it is hard to find investors that will support an unknown business. However, with the option of owning stock at such a low initial cost allows the business to receive the financial support that may not have been available before.

There is one very important thing to remember about penny stocks; the primary requirement is that you need to research them.  Consult a good penny stock resource like the buy penny stocks guide to get a basic understanding of what to look for in a penny stock.  Remember, that just because it is cheap does not mean that it is good. On the same note it does not mean that it is bad either. Learning when to buy the stock, and whether or not to buy it is a skill that will be developed as you continue to trade.

Buying penny stocks is a great way to begin your stock buying career. It really doesn’t matter if you have the resources to make a greater investment or not. The best way to learn is by starting low, and then increasing your portfolio over time.  Also, remember to never allocate more than 10% of your overall portfolio to micro-cap stocks due to their inherently high risk.

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